What do you mean by dilution?

According to my personal understanding, stock dilution is a way for shareholders to reduce their shares in the same proportion, which is mostly used when increasing capital and shares and introducing partners. For example, a cake is this big. It used to be eaten by two people, but now a third person comes and says he wants to share it. So did the two people who ate the cake eat less than before? That's what it means.

Dilute shareholders' shares

1. Introduce new investors and increase the registered capital (capital increase and share expansion), but the shares of the original shareholders will be diluted in proportion; It's hard for you to gain control, and all the shareholders' shares have been diluted.

2. In order to acquire the shareholders' equity, both parties negotiate the conditions and let the other party sell the shares. There is no compulsory stock trading between shareholders. Generally speaking, if a shareholder wants to transfer his equity, other shareholders have the preemptive right under the same conditions.

3. Starting a business together is because of mutual trust and values. Set up a company, be a villain first, design the equity, and then be a gentleman after signing the agreement; After the villain, the gentleman, everyone is still a friend; Gentlemen come first, villains come last, and everyone becomes enemies. The design of equity is as important as the design of business model and product.

How do partners get rich through equity

1. Qixin Qi Xin works together to make the company bigger and manage the products well. The company has income and profits, and the partners have dividends. This channel is the safest and most practical, and it is also the channel for most people.

2. In the process of starting a business, the introduction of venture capital and the entry of capital can not only provide enterprises with funds for enterprise development, but also bring extensive resources and management experience. More importantly, it can give enterprises a tradable valuation. After rounds of investment by investment companies, the company's valuation has increased, and the value of the founding team has also risen. You can even sell some shares in advance and get cash benefits. If you can buy or even list an IPO in the future, as a founding team, you will basically be financially free.

The above is my personal opinion.